Equity-What to Give Sellers Who are Behind - Posted by PJ

Posted by JohnBoy on March 10, 2002 at 17:01:36:

Where will you get the $6k + $3k cash to make up the back payments and money for the sellers? You would need to get at least $9k down from your buyer to break even and then wait for your potential profit over time.

The most I ever offer a seller in a case this this is up to $2500 for moving expenses. As it stands they really have no equity to deal with. If the list with an agent their equity will be gone to pay the realtor’s commission and their payments will continue to fall behind until the house sells and additional interest, late charges and attorney fees will stack onto what they already owe!

Plus, you will have to cover any payments until you find a buyer. Even if you make the deal suject to you finding a buyer first, if it takes you 2 months to find someone that will be another 2 months of payments in arrears unless these sellers will make them while you try to find someone!

You could see about getting the lender to put the arrears onto the back end of the loan or work out a separate payment plan to catch up on them. That would save you from having to come up with the full $6k to bring the loan current now and allow you room to make something off your buyer’s down payment.

But offering the sellers $147,600 on a $160k property is no deal! That’s paying retail! The only way I pay retail is if I don’t have to pay anything out of pocket or use all of my buyer’s down payment money to make the deal work!

I would tell them $2500 once you find a buyer and that’s it! They would need to decide soon because that offer drops by whatever amount their payments are each month while they sit around and decide! So if they want the full $2500 then they need to decide within a day or so, or they will have to take less. The clock is ticketing and those payments only continue to fall further behind while they sit around “thinking” about it! They need to, “sh*t or get off the pot!” Time is of the essence!!!

Otherwise you’ll just buy it from the bank for a lot less than that after they take it back and the sellers will get ZIP and a ruin their credit over it in the end!

Equity-What to Give Sellers Who are Behind - Posted by PJ

Posted by PJ on March 10, 2002 at 16:28:07:

Sellers are 4 payments behind, but bank hasn’t filed Notice of Default yet. They will sell to me sub2, but they wanted 10K in cash. (I thought they were motivated when I screened on the phone, but in person, they didn’t seem as motivated.)
I told them I’d get them $3000 right before they vacate the property, and have them take a note back for $3600 to be paid when a new buyer cashes out, could be a year or two, or right away if I retail the house. They’re thinking about it.

The numbers are: Owe 135K + arrears of $6000K, Total Owed 141K. ARV is $160 for retail, $170 for L/O. No repairs needed.

Do you not consider giving sellers in this situation any money, or is giving them $6600 sensible? Also, what would secure my note back to them?

many thanks.